RusBankrot
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14/06/2025
Saturday
THIS DAY IN HISTORY:
14 June 
1970 The Schengen Agreement, which included five European states, was signed.
1970 The Schengen Agreement, which included five European states, was signed.
1970 China refused to recognize the USSR as the leaders of the communist movement.
1970 China refused to recognize the USSR as the leaders of the communist movement.
1970 The Hawaiian Islands became the territory of the US.
1970 The Hawaiian Islands became the territory of the US.
14 June
1970 The Schengen Agreement, which included five European states, was signed.
1970 The Schengen Agreement, which included five European states, was signed.
1970 China refused to recognize the USSR as the leaders of the communist movement.
1970 China refused to recognize the USSR as the leaders of the communist movement.
1970 The Hawaiian Islands became the territory of the US.
1970 The Hawaiian Islands became the territory of the US.
THE SUPREME COURT OVERTURNED THE PRECEDENT COLLECTION OF "WESTERN" DEBTS FROM THE RUSSIAN SUBSIDIARY
![THE SUPREME COURT OVERTURNED THE PRECEDENT COLLECTION OF "WESTERN" DEBTS FROM THE RUSSIAN SUBSIDIARY](/upload/iblock/96d/file_1349.jpg "THE SUPREME COURT OVERTURNED THE PRECEDENT COLLECTION OF "WESTERN" DEBTS FROM THE RUSSIAN SUBSIDIARY")
The Supreme Court of the Russian Federation has exempted Citibank in Russia from having to pay the debts of its parent company in the United States (Citibank N.A.) to Sovcombank. The judicial acts adopted by the arbitration courts earlier were annulled. The lawsuit has been sent to the Arbitration Court of the city of Moscow for a new review.
The reason for the legal dispute was a debt of $24.05 million. It was formed eight years ago on swaps and derivatives transactions. After the beginning of the sanctions pressure, the return of these assets proved impossible. The parent structure of Citibank recognized the debt in a pre-trial order, but refused to repay it. The organization referred to the restrictions caused by international sanctions. In response, Sovcombank initiated a lawsuit, naming the American Citibank and its Russian subsidiary as co-defendants.
Sovcombank was supported by courts of several instances. They came to the conclusion that it was necessary to establish joint responsibility of both structures, pointing to the fact that they belong to the same financial group and are centrally managed from the United States. According to the judges, the defendants pursued common interests.
However, Citibank filed a cassation appeal. He stated that the legislative regulation of these issues in the Russian Federation does not imply the transfer of debt obligations of a foreign parent company to its Russian subsidiary.
The Supreme Court of the Russian Federation considered the complaint. He drew attention to the fact that the affiliation of banking structures to the same group does not yet serve as a basis for joint responsibility. The Arbitration Court of the city of Moscow has now been ordered to establish the facts of abuse of the independence of a legal entity, to prove the mutual benefit between organizations in terms of following the sanctions restrictions.
Against the background of this case, other disputes related to debt collection from Russian divisions of foreign companies are actively developing in Russian judicial practice. Earlier, Rusbankrot had already touched upon the situation surrounding the Russian Raiffeisenbank. Earlier this year, the Arbitration Court of the Kaliningrad region ordered the credit institution to pay more than ˆ2 billion in favor of Rasperia Trading Ltd. A similar case is being considered with respect to Renaissance Group structures, following the freezing of assets of Perpecia Ltd. in the Euroclear international system.
The Supreme Court's decision in the Citibank case sets an important vector for the development of practice: now, in similar disputes, a more in-depth analysis of the economic independence of Russian subsidiaries and their real connection with the actions of foreign parent structures will be required. Experts believe that this decision will significantly affect approaches to holding Russian legal entities accountable under sanctions.
Lawyers believe that the conclusions of the Supreme Court of the Russian Federation in the Citibank case will be of great importance for such disputes. Now the courts will have to analyze the circumstances of each case more carefully, rather than automatically assigning responsibility to the Russian units of international groups. According to experts, the court's approach will require evidence that the actions of both companies were indeed coordinated and mutually beneficial, and were not based solely on formal communication through a corporate structure.
The Supreme Court's decision has become a landmark for the development of judicial practice in the context of sanctions and the increasing isolation of the Russian financial market. According to lawyers, this will determine higher standards of proof in similar disputes and reduce the risk of unjustifiably holding Russian companies accountable for the actions of their foreign parent structures.
The reason for the legal dispute was a debt of $24.05 million. It was formed eight years ago on swaps and derivatives transactions. After the beginning of the sanctions pressure, the return of these assets proved impossible. The parent structure of Citibank recognized the debt in a pre-trial order, but refused to repay it. The organization referred to the restrictions caused by international sanctions. In response, Sovcombank initiated a lawsuit, naming the American Citibank and its Russian subsidiary as co-defendants.
Sovcombank was supported by courts of several instances. They came to the conclusion that it was necessary to establish joint responsibility of both structures, pointing to the fact that they belong to the same financial group and are centrally managed from the United States. According to the judges, the defendants pursued common interests.
However, Citibank filed a cassation appeal. He stated that the legislative regulation of these issues in the Russian Federation does not imply the transfer of debt obligations of a foreign parent company to its Russian subsidiary.
The Supreme Court of the Russian Federation considered the complaint. He drew attention to the fact that the affiliation of banking structures to the same group does not yet serve as a basis for joint responsibility. The Arbitration Court of the city of Moscow has now been ordered to establish the facts of abuse of the independence of a legal entity, to prove the mutual benefit between organizations in terms of following the sanctions restrictions.
Against the background of this case, other disputes related to debt collection from Russian divisions of foreign companies are actively developing in Russian judicial practice. Earlier, Rusbankrot had already touched upon the situation surrounding the Russian Raiffeisenbank. Earlier this year, the Arbitration Court of the Kaliningrad region ordered the credit institution to pay more than ˆ2 billion in favor of Rasperia Trading Ltd. A similar case is being considered with respect to Renaissance Group structures, following the freezing of assets of Perpecia Ltd. in the Euroclear international system.
The Supreme Court's decision in the Citibank case sets an important vector for the development of practice: now, in similar disputes, a more in-depth analysis of the economic independence of Russian subsidiaries and their real connection with the actions of foreign parent structures will be required. Experts believe that this decision will significantly affect approaches to holding Russian legal entities accountable under sanctions.
Lawyers believe that the conclusions of the Supreme Court of the Russian Federation in the Citibank case will be of great importance for such disputes. Now the courts will have to analyze the circumstances of each case more carefully, rather than automatically assigning responsibility to the Russian units of international groups. According to experts, the court's approach will require evidence that the actions of both companies were indeed coordinated and mutually beneficial, and were not based solely on formal communication through a corporate structure.
The Supreme Court's decision has become a landmark for the development of judicial practice in the context of sanctions and the increasing isolation of the Russian financial market. According to lawyers, this will determine higher standards of proof in similar disputes and reduce the risk of unjustifiably holding Russian companies accountable for the actions of their foreign parent structures.
30.04.2025
